How to save tax in India ( Old tax regime) ?

Writer: Bizzport Consultants

Enhance Your Tax Savings: A Guide for Salaried Individuals in India

Discover smart ways to optimize your tax savings, avoiding the common pitfall of procrastination. In India, the financial year runs from April 1 to March 31, making March 31 the crucial deadline for actions like investments.

Many individuals only take tax matters seriously when seeking refunds or facing additional tax payments. However, by July, when tax return filing occurs, March is long gone, leaving individuals with limited options and often resorting to dubious practices.

In such scenarios, some tax preparers exploit the urgency, charging a percentage fee, typically 15% of the tax saved or refunded. This approach involves high risks, exposing clients to legal repercussions. For those with no tax expertise but substantial earnings, it's vital to question how a tax preparer can secure more refunds or reduce tax liability within the same legal framework applicable to everyone.

To simplify tax-saving strategies for salaried individuals, consider these legal avenues:

1. HRA Deduction:

   • Calculate HRA from your pay slip (typically 50% of basic salary).
   • Multiply your basic salary by 40% to determine the maximum HRA deduction.
   • Ensure you have rent receipts for verification.
   • 
     

2. EPF Contribution:

   • Request your employer to deduct EPF, eligible for section 80C deduction.
   • EPF investment generates regular income.
   • 
     

3. NPS Subscription:

   • Inquire about NPS subscriptions in your company.
   • Similar to EPF, employer deducts this amount for collective tax savings.
   • 
     

4. Leave Travel Allowance (LTA):

   • Submit domestic flight bills to HR payroll for domestic travel deductions.
   • 
     

5. Life Insurance Premium:

   • Invest in term life insurance (ICICI Life, HDFC Life, LIC) and claim section 80C deductions.
   • 
     

6. School Tuition Fees:

   • Claim deductions for school tuition fees if you have school-going children (section 80C).
   • 
     

7. House Loan Principal Repayment:

   • Provide house loan details to HR payroll for section 80C deductions.
   • 
     

8. Medical Insurance:

   • Obtain medical insurance for family members, eligible for section 80D deductions.
   • 
     

9. Utilize Remaining Deduction Limit:

   • If deductions from previous points do not reach the 1.5 lakh annual limit, consider monthly SIP in Mutual Fund ELSS schemes or opt for PPF contribution.
   • 
     

10. NPS Contributions:

    • Register on the NPS portal for voluntary monthly contributions (maximum deduction INR 50,000 annually).

Complete these transactions by March 31, using secure methods like card, cheque, UPI, or net banking. False claims post this date risk legal consequences and commission payments to tax preparers.

Investments should be viewed as a means to secure your financial future, not as an expense. Prioritize financial stability by embracing these legal tax-saving strategies and fortify yourself against economic uncertainties and rapid technological advancements. Think of investments as a supplementary income source, preparing for the uncertainties that lie ahead.

Visit website to connect with experts 
Email: info@bizzguru.in

Last updated on Date: 

5th Aug 2023